Optimizing spectral reuse is a major issue in large-scale IEEE 802.11 wireless networks. Power control is an effective means for doing so. Much previous work simply assumes that each transmitter should use the minimum transmit power needed to reach its receiver, and that this would maximize the network capacity by increasing spectral reuse. It turns out that this is not necessarily the case, primarily because of hidden nodes. This paper shows that in a network with power control, avoiding hidden nodes can achieve higher overall network capacity compared with the minimum-transmit-power approach. It is not always best to use the minimum transmit powers even from the network capacity viewpoint. Specifically, we propose and investigate two distributed adaptive power control algorithms that minimize mutual interferences among links while avoiding hidden nodes. Different power control schemes have different numbers of exposed nodes and hidden nodes, which in turn result in different network capacities and fairness. Although there is usually a fundamental tradeoff between network capacity and fairness, we show that, interestingly, this is not always the case. In addition, our power control algorithms can operate at desirable network- capacity-fairness tradeoff points, and can boost the capacity of ordinary non-power-controlled 802.11 networks by two times while eliminating hidden nodes.